Unemployment's Shocking Truth: Its Outrageous Causes and Consequences and Its Solutions

Copyright 2008 Jack Stone; Joe McCraw.

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Table of Contents

Acknowledgements

Introduction    How the Public Is Deceived About the Issue of Unemployment and About Related Matters of Concern to Working People

1.    The Extent of Unemployment

The Rising Tide of Underemployment

2.    The Sharp Conflict of Interest Between Working People and their Employers That Preceded the Assault and Defeat By the Representatives of The Business Class of the Full Employment Law Proposal of 1945

The Remedy: The Wagner Act of 1935

The Counterattack of Business

Against The Wagner Act

3.    The Assault and Defeat of the 1945 Full Employment Law Proposal by the Representatives of the Business Class

The Opposition of the National Association of Manufacturers to Full Employment

The Opposition of the Chambers of

Commerce to Full Employment

The Opposition by the Committee for Constitutional Government to Full Employment

The Opposition of the American Farm Bureau Federation to Full Employment

The Opposition to Full Employment by the Business Council and Its Committee for Economic Development

The following are the organizations that supported the 1945 Full Employment Bill:

4.    How the Capitalist Class Was Able To Scuttle the Full Employment Law Proposal of 1945

5.    The Opposition of the Business Class to the 1978 Humphrey-Hawkins Full Employment Bill, the Testimony of the Bill’s Most Prominent Supporters and the Early Burial by the Congressional Allies of Business of Five Full Employment Laws Proposed from 1985-1999

Why Was the Bill Introduced at This Time?

The Path of the Equal Opportunity and Full Employment Act of 1974 (S50)

The Assault by the Representatives of the Business Class Against the Full Employment and Balanced Growth Bill of 1974 (S50)

The Statement by Mr. Lewis W. Foy, Representative of the Business Roundtable

The Statement by Mr. George Hagedorn, Representative of the National Association of Manufacturers (NAM)

Statement by Dr. Jack Carlson, Representative of the U.S. Chamber of Commerce (CoC)

The Response of the Supporters of S50

Testimony of Mr. Murray Finley, President of the Amalgamated Clothing and Textile Workers Union

Testimony of Coretta Scott King, Widow of Martin Luther King and a Cosponsor of S50

The Early Burial by Congressional Allies of Business of Five Full Employment Law Proposals Made Between 1985 and 1999

6.    Why Are Capitalists as a Class opposed to Full Employment?

Introduction to Chapters 7. – 12.

7.    The Great Inequality in Wealth and Income As A Cause of Mass Unemployment

The Rising Inequality in Income and Wealth

What Are the Causes of the Rising Inequality of Wealth in America?

The Increasing Rate of Exploitation of the Labor of Working People

How Rising Income Inequality Increases Mass Unemployment

8.    Business’s Unending Introduction and Use of Advanced Technology as a Cause of Mass Unemployment

9.    The Export of Jobs as a Major Cause of Mass Unemployment

How Many and What Kind of Jobs Are Being Lost

The Export of Well-Paid Industrial Jobs

Where Have the Jobs Been Going

Why Are the Corporations Exporting Jobs to Other Countries?

The Role of the Federal Government in the Export of Jobs

Consequences of Job Exports for

Working People

10.    Mergers and Acquisitions as a Cause of Mass Unemployment

A brief sketch of the successful efforts by business people to eliminate competition

Why Do Firms Acquire or Merge With Other Firms?

What are the motives that drive corporations to merge and acquire other firms?

The Consequences of Mergers and Acquisitions for America’s Working People

11.    Imported Labor as a Cause of Mass Unemployment

The Impact of Immigration on Native-born Workers

How Many High Tech Workers Are Legally Imported

Why are they brought in, and under what pretext

12.    The Federal Reserve Bank as a Creator of Mass Unemployment

How Do Banks and Other Lenders Fare When the Fed Raises Interest Rates?

A Closer Look at the Fate of Workers When Interest Rates Are Raised

What Are the Real and Root Causes of Inflation?

A Solution to Inflation Without Creating Unemployment

13.    Recessions as a Cause for Mass Unemployment

The Great Depression of the 1930s and Its Consequences for Working People

14.    The Outrageous Consequences of Mass Unemployment

The Extent of Incarceration

Who Gains from the Escalating Imprisonment

Widespread Crime as a Consequence of Mass Unemployment

Stolen Vehicles

Muggings

Rampage Killings

Inner-City Murders

Impact on Families

Welfare Costs

Homelessness

Health Costs

Arsons, Bank Robberies and Shoplifting

Bank Robberies and Killings

Shoplifting

Social Costs of Low Wage Employment

Unrest and Destructive Riots

Impact of Mass Unemployment on Law Enforcement Officers

Pervasive Feelings of Insecurity

How Mass Unemployment Weakens the Bargaining Power of Workers

The Huge Monetary Costs and Job Losses

15.    Solutions to the Problem of Mass Unemployment

What Does Full Employment Mean?

The Programs that will Create Jobs

Housing

Mass Transit

Overhauling and Expanding the Nation’s Infrastructure

Education

Energy

Health Care

Environment

Child Care

Teen Recreational Centers

Parks

The Many Benefits of Full Employment

Where is the money to come from for the many job programs?

The Military Industrial Financial (MIF) Complex

The Threat Posed by the MIF Complex to Our Fragile Democracy

Taxes

Pension Funds and Taxes That Will Be Paid in a Full Employment Economy

Is Full Employment Possible?

Do either of the two major parties represent the real needs of working people?

Only Participation of All Working People in Progressive Politics Will Eliminate Mass Unemployment

How even one attempt to limit the business class domination of the economy ended in failure

Two Kinds of Proposals for Solving the Problem of Mass Unemployment

Proposals Offered by Economic Democrats

Afterword

Endnotes

Dedication

This book is dedicated to Jack’s daughter, Meechal and son, Yuval, to his sister Maisie who provided the indispensable encouragement without which this book could never have been written and to all working people adversely affected one way or another by the outrageous institution of mass unemployment.

Acknowledgements

Joe McCraw is a political activist. He graduated with a BA in Anthropology from UCSC in 2004. He then moved to Rio de Janeiro to learn Portuguese and study land reform movements (M.S.T.). Joe is the administrator of MediatedThought.com a social activism website. He currently resides on Treasure Island in the San Francisco Bay.

A person who deserves special thanks is my assistant, Virginia Kalagorgevitch, who stood by me all the eight years it took me to do this book.

I must also express my gratitude to Congressman John Conyers and his staff for their help in providing the information on the full employment law proposals of the 1980s and the 1990s.

I also owe a special debt of gratitude to Carol Nelson, Kathrina and Mica Nopuente, Danica Obligacion, Brian Buckley and Ken Dickinson.

Others who have very kindly given me of their time and their advice were Jamie Ginsberg, Harold Abend, Sue Ellen Raby, Henry Schreibman, Luciana Brito, Doreen Stock, Michael Harr, Irene Favreau, Bette-Lou Woods, Hazel Jaramillo, Arthur George, Steve Henneman, and Winnie Pablo.

Special thanks are also owed to Elmer Jan, Tom McGibney, Damon Hill, Livia Lewin, Carol Uhrmacher, and Laurie Thompson, all of the reference desk of the Marin County Civic Center Library in San Rafael, California.

Sincere thanks goes to Michael Rosenthal of San Rafael, California, for his copyediting and proofreading.

My deepest thanks goes to the following publishers who have granted permission to quote passages or to reproduce graphic materials from their books:

The Free Press, a Division of Simon & Schuster Adult Publishing Group for passages from History of American Labor by Joseph G. Rayback.

Simon and Schuster for The Secret Diary of Harold L. Ickes, Vol. II: The Inside Struggle, 1936-1939 by Harold L. Ickes.

The New Press for From the Folks Who Brought You the Weekend: A Short Illustrated History of Labor in the United States by Priscilla Murolo and A.B. Chitty.

The American Prospect for Lester Thurow, "The Crusade That’s Killing Prosperity, and Robert Reich It’s the Year 2000 Economy, Stupid".

Multinational Monitor for Sewing Discontent in Nicaragua by Leia Raphaelidas and Aiding and Abetting Corporate Flight: U.S. Aid in the Caribbean Basin by Barbara Briggs.

Monthly Review Press for A History of Capitalism 1500-1980 by Michael Beaud.

The New York Review of Books for The New Ruthless Economy by Simon Head.

UE Press for Labor’s Untold Story by Richard O. Boyer and Herbert M. Morais.

South End Press for Strike! by Jeremy Brecher,

William Greider for One World Ready or Not and Secrets of the Temple

The New York Times for A 20-year G.M. Parts Migration by Sam Dillon.

Houghton Mifflin for The Coming of The New Deal by Arthur Schlesinger, Jr.

CARTOONS

The first and most deeply felt acknowledgement I must make is to Peter Gilmore of the United Electrical, Radio and Machine Workers of America (UE) for granting me permission to use the many brilliant cartoons by Fred Wright. Peter has been not only kind but has provided much encouragement.

I am no less grateful to Gary Huck and Mike Konopacki for their several wonderful cartoons and to Jeff Danziger for his hilarious cartoon on the export of jobs to China.

I must also express my gratitude to Jan Bunch of Tribune Media Services for her kind response to my request to use Jeff MacNelly’s cartoon on the issue of underemployment.

Cartoons by Fred Wright: pp. 41, 96, 99, 102, 104, 105, 112, 115, 127, 206, 217

Cartoons by Gary Huck and Mike Konopacki: pp. 88, 204

Cartoon by Danziger: p. 126

Cartoon by Jeff MacNelly p. 21

Introduction

How the Public Is Deceived About the Issue of Unemployment and About Related Matters of Concern to Working People

On November 7, 2003, W. Michael Cox, chief economist of the Federal Reserve Bank of Dallas coauthored an op-ed article in the New York Times entitled The Great Job Machine.

Large-scale upheaval in jobs is part of the economy; he wrote, "the impetus for it comes from technology, changing trade patterns and shifting consumer demand. History tells us that the result will be ever more jobs, greater productivity and higher incomes for American workers in general.

New Bureau of Labor Statistics data covering the past decade show that job losses seem as common as sport utility vehicles on the highways. Annual job loss ranged from a low of 27 million in 1993 to a high of 35.4 million in 2001. Even in the year 2000 when the unemployment rate hit its lowest point of the 1990’s expansion, 33 million jobs were eliminated. And then, according to the Labor Bureau’s figures, annual job gains ranged from 29.6 million in 1993 to 35.6 million in 1999.

The article is wonderful in the number of important facts it omits. For instance, Cox is dead silent on how many of the annual job gains were part-time, insecure and mind numbing and on how many of those jobs, both full– and part-time, paid less than a living wage with few or no benefits. Nor does he tell us that many part-time workers have been compelled to work two or three jobs to make ends meet. Mr. Cox also very conveniently says nothing about the millions of discouraged workers who have stopped looking for work and are therefore not included in the unemployment count of the Labor Department’s Bureau of Statistics.

Day in and day out, Cox writes, workers quit their jobs or get fired, then move on to new positions. Companies start up, fail, downsize, upsize, and fill the vacancies of those who left. It is workers migrating to new and existing jobs that keeps the country from sinking into some depression-like swamp.

….fill the vacancies of those who left, Cox writes. Had he been living in the real world, he would have said that many of the jobs left vacant were well-paid jobs and are filled not by workers but by thousands of computers, robots and other advanced technologies introduced by corporations or sent abroad to India, Pakistan and elsewhere where wages are a fraction of what was paid to American workers. And the purpose of all this displacement of American workers is driven by an insatiable hunger for profits.

And then comes Cox’s classical understatement of the woes that jobless workers have to face. Yes, this disruption can be very hard on some workers who lose their employment and have trouble adapting.

Let’s pause, a minute, Mr. Cox. You glossed over a very severe issue. Very hard needs to be spelled out. If you would have taken the trouble to go and have an intimate look into the lives of the unemployed, you would see a world in which many of them suffer horrendous consequences. Not having a job or losing hope of ever finding one or being jobless for a prolonged period can mean the proverbial last straw on the camel’s back. It can mean that many jobless working people already saddled with other problems – family, financial or otherwise – can sink into a state of chronic depression which, in too many cases, leads to the abuse of alcohol, to drugs, to spousal or child abuse and to the breakup of families. And yes, in some of the worst cases, even to suicides and homicides.

But in a larger sense, he writes, the turmoil of the labor market is vital to economic progress. Economic progress for whom, he doesn’t say. Millions of well-paid jobs have been eliminated, either by the ceaseless introduction of new technology or by their export to other countries where working people are paid a fraction of what is paid in the United States. This vast loss of well paid and mostly unionized jobs has forced millions of American workers – those who are still working – into jobs whose average wages have plummeted at least twenty percent since the 1970s. But he is right if what he meant by economic progress has been the excellent economic progress both in wealth and income made by the top ranks of the corporate-investor class.

A fact of utmost importance that Michael Cox failed to mention is that without the enormous economic stimulation provided by all levels of government in this country, there would have been a total downfall of the system instead of the economic progress that he mentions.

Most people, if they even pause to think about it, believe that it is the so-called free enterprise capitalist system that creates the jobs needed by millions of the country’s working people. That is only partly true. But few, if any, are aware that many millions of jobs are created directly and indirectly by all levels of government: federal, state, counties, and cities. When spent, the many billions of dollars that those government jobs generate provide the profit margins needed to prop up what would otherwise be a wobbly system. In the year 2001, for instance, all levels of government employed 20,970,000 employees full and part time and they were paid $60,632,000,000. These did not include employees of the Central Intelligence Agency, the National Security Agency, the Defense Intelligence Agency, and the National Imagery and Mapping Agency.¹

But it is not only those vast networks of government jobs that sustain the system. In 2002, the Federal government created many jobs – several hundred thousand jobs is a reasonable estimate – by granting prime contracts worth $180,600,000,000 most of which were given to corporations that produce aircraft, electronics, communication equipment, missiles and space systems, ships, tanks, ammunition and weapons for the military. In 2003, it granted $219,500,000,000 for the same purpose.²

Furthermore, the Department of Homeland Security spent a total of $42,447,200,000 in 2003, $41,307,100,000 in 2004, and a requested $47,385,700,000 for 2005. It’s impossible to say how many jobs were thus created but could it have been an insignificant number?³

In 2002, the federal government also provided $1,368,300,000,000, [that is $1 trillion, 368 billion and 300 million] in the form of credits.⁴ In fact, in 2003 the federal government alone spent a total of $2,140,400,000,000 – that is 2 trillion, 140 billion and 400 million dollars.⁵ What is that if not a giant prop for the system? Yet another prop, holding up an otherwise chronically unstable system, are the billions of dollars worth of tax cuts doled out mainly to the very rich. And when these tax cuts are granted, it is always justified by declaring that corporations will invest those cuts in creating needed jobs. How many jobs such tax cuts create is difficult to know for there is no government agency tracking the use of those cuts. If the market is already saturated with goods and services, what incentive is there for corporations to invest in creating jobs? In fact, businesses have been known to use their tax cuts for purposes other than creating jobs. During the Reagan administration, for instance, many corporations used their millions of dollars in cuts to acquire other corporations.⁶

It is important to note that the millions of jobs created by all levels of government are generally the ones that are more likely to be secure and pay relatively decent wages and salaries, and therefore have ripple effects. Persons with good income buy more goods and services than others, thus creating jobs for a host of service industries such as bank, insurance companies, retail and wholesale outlets, restaurants, hotels, etc.,

In sum, therefore, governments at all levels create the millions of jobs without which the capitalist system would have great difficulty sustaining itself. It is interesting to note that while governments create the very jobs that sustain the so-called free enterprise system, the advocates of that system never cease to vilify government by demanding that ‘it get off our backs.’

One of the many wonders of our politics is that when our Presidents brag about the many millions of jobs their Administrations create, they are dead silent about the fact that many of those jobs are part time, poorly paid and insecure. Many of the workers employed in these low-income jobs are compelled to work two or three jobs to make ends meet.

According to official statistics, in the year 2003, for instance, there were 7,315,000 part time workers. Most of the part-time workers were whites 25-54 years old, and they comprised 6,273,000 of the total.⁷ But these figures do not include a vast array of part-time work paid for under the table.

But that is not the end of the story. Commenting on the role of the federal government in sustaining the [capitalist] economy, Lewis Lapham, the editor of Harper’s magazine writes: For ten years I have listened to self-styled entrepreneurs (men of vision, men of genius, etc.) bang their fists on grillroom tables and complain of the thousand and one ways in which government regulations strangled their initiative and bound the arm of honest labor. I’m sure that much of what they said was true, but never once did I hear any of them acknowledge their abject dependence on the gifts of government subsidy – the mortgage deductions on residential real estate, myriad investment credits and tax exemptions, preferential interest rates, Social Security payments, subsidies to entire industries (defense, real estate, agriculture, highway construction, etc.), tariffs, the bankruptcy laws, the licenses granted to television stations, the banking laws, the concessions given to the savings and loan associations.⁸

The most glaring aspect of Cox’s deception was his total omission of the Taft-Hartley Act, one of the severest blows dealt to working people in America’s history. That Act, enacted in 1947 by a Congress dominated by the allies of business, has since the 1980s been responsible for the gradual erosion of the living standards of many working people.

To understand why the anti-worker Taft-Hartley Act was enacted, one must go back to the 1935 Wagner Act. The Wagner Act stated Nothing in this Act…shall be construed so as either to interfere with or impede or diminish in any way the right to strike, or to affect the limitations or qualifications on that right. Thus, in essence, the Wagner Act provided workers the much needed